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NOTE 11 — OTHER POST -EMPLOYMENT BENEFITS PLAN A. Plan Description The City provides post -employment healthcare benefits as required by Minnesota Statute 471.61 subdivision 2b. Active employees, who retire from the City when eligible to receive a retirement benefit from the Public Employees Retirement Association (PERA) of Minnesota and do not participate in any other health benefits program providing coverage similar to that herein described, will be eligible to continue coverage with respect to both themselves and their eligible dependent(s) under the City health benefits program. Retirees are required to pay 100% of the total group rate. Since the premium is a blended rate deteiniined on the entire active and retiree population, the retirees, whose costs are statistically higher than the group average, are receiving an implicit rate "subsidy". The City has used the alternative valuation method set forth in GASB Statement No. 45 to deteiuiine the materiality of Other Post -Employment Benefits, OPEB. The plan does not issue a publicly available financial report. B. Funding Policy The required contribution is based on projected pay-as-you-go financing requirements. The City Council may change the funding policy at any time. C. Annual OPEB Cost and Net OPEB Obligation The City's annual OPEB cost (expense) is calculated based on annual required contributions (ARC) of the City, an amount deteiniined on an actuarially deteiniined basis in accordance with the parameters of GASB Statement Nos. 43 and 45. The ARC represents a level funding that, if paid on an ongoing basis, is projected to cover noinial costs each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed 30 years. The following table shows the components of the City's annual OPEB cost for the year, the amount actually contributed to the plan, and the changes in the City's net OPEB obligation to the plan: Annual required contribution Interest on net OPEB obligation Adjustment to annual required contribution Annual OPEB cost (expense) Contributions made Increase in net OPEB obligation Net OPEB obligation - beginning of year Net OPEB obligation - end of year $ 71,155 9,664 (8,288) 72,531 (7,636) 64,895 214,747 $ 279,642 The City's annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation for the past three years are as follows: Fiscal Year Ended December 31, 2010 December 31, 2011 December 31, 2012 Annual OPEB Cost $ 87,580 $ 90,444 $ 72,531 Annual Plan Sponsor C ontribution $ 15,994 $ 17,514 $ 7,636 Percentage of Annual OPEB Cost Contributed 18% 19% 11% Net OPEB Obligation $ 141,817 $ 214,747 $ 279,642 84